In yet another twist in the tangled fate of Anderson News—which as recently as January shared half of the country’s magazine distribution business with Source Interlink and is now facing chapter 7 involuntary bankruptcy in U.S. Bankruptcy Court in Delaware—the company fired back at magazine publishers and wholesalers in U.S. District Court in the Southern District of New York. It is seeking damages in an amount to be determined at trial.
Under the Sherman Act and common law concerning conspiracy, Anderson charged Bauer, American Media, Inc., Hachette, Rodale, Time, Time/Warner Retail Sales & Marketing, Curtis, Kable, Distribution Services, Inc., Hudson and the News Group with an anti-competitive scheme “to attack, disparage and destroy Anderson’s business.” Among other things, Anderson asserts that the defendants spread false rumors about its financial stability, forced it to sell off its distribution facilities at “fire-sale prices” and tried to steal intellectual property by raiding its employees.
Anderson calls the defendants’ scheme “a reaction to growing requests by retailers for larger discounts on magazines and scan-based trading.” The latter would enable retailers to report magazine sales through electronic scanners and then dispose of unsold copies. It claims that the defendants conspired to eliminate both Anderson and Source (which initiated a suit against magazine publishers in the same court last month, but has since settled with American Media, Time/Warner and The News Group) because both wholesalers supported efficiency measures like SBT. As a result, Anderson says that it was cut off from 80% of the magazines it had delivered for years and began losing $1million a week.
On February 7, Anderson suspended operations, then closed permanently on February 16. Prior to the closing it had 6,000 employees. It subsequently dismissed 2,500 employees and now faces a class action suit as part of the chapter 7 proceedings for failing to give employees a 60-day WARN notice.